What is Blockchain? • The enabling technology of Bitcoin • A distributed database without a controlling authority • An auditable database with provable lineage • A way to collaborate with principals without trust • Trust and storage mechanism for cryptocurrencies • Architectural component for Internet-scale systems? 4
What is Blockchain? Basic terms 5 Crypto Currencies Ether Distributed Ledger P2P distributed, append-only, transaction list Blockchain cryptographic validation, distributed consensus mechanism Smart Contracts code embedded in the blockchain, manipulates the blockchain state
What is Blockchain? Consensus Q. How do we know the information on the chain is correct? A. Because everyone agrees – this is “consensus” Blockchains use different types but “proof of work” is common • To create (“mine”) a block you need to solve a hard problem • If you don’t solve the problem then peers will reject your block • Thus forging the blockchain would require a huge amount of work to get your fraudulent blocks accepted (“impossible” without 51% of capacity) Other models including “proof of stake” and “proof of membership” 8
What blockchains exist? A lot of blockchain implementations exist. A small sample of them are: Bitcoin 2009 Cryptocurrency Litecoin 2011 Cryptocurrency Ripple 2012 Blockchain payment and settlement system Chain 2014 Enterprise blockchain Ethereum 2015 Blockchain dapp platform Hyperledger 2015 Linux Foundation open source blockchain projects R3 Corda 2016 Distributed ledger for the financial industry Multichain 2017 Enterprise blockchain 10
What is Blockchain being Used For? Trade Settlement and FX Transactions digital ledger that tracks and protects valuable assets verifiable supply chains post-trade processing Keybase Identity management verified data Georgia government records supply chain efficiency 14
Properties of a Good Blockchain Application • Multiple separate parties want to cooperate • No central intermediary exists (or is wanted) • Relatively slow moving processes (allow latency) • Well-defined, bounded process • Predictable, simple data access required 15
Demo: Browse a blockchain blockchain.info Most public blockchains have a range of associated web based “explorers” • For Bitcoin we’ll use blockchain.info • For Ethereum we’ll use etherscan.io etherscan.io 16
Demo: Explore a blockchain • The WannaCry ransomware attackers have 3 bitcoin wallets: • 13AM4VW2dhxYgXeQepoHkHSQuy6NgaEb94 • 115p7UMMngoj1pMvkpHijcRdfJNXj6LrLn • 12t9YDPgwueZ9NyMgw519p7AA8isjr6SMw • We can use blockchain.info to find out how much they have collected in ransom so far and where they sent it • Note: if using the API it returns values in satoshis: there are 10-8 satoshis in a bitcoin, so multiply by 0.00000001 to get BTC 17
Characteristics of a Blockchain Ledger • Distributed, replicated “database” • Distribution via a p2p model (no master) • Consensus model used to ensure integrity • Append only “immutable” store • Highly fault tolerant • Eventually consistent 19
Adding Smart Contracts • Code stored in a blockchain, executed by the blockchain virtual machine • Programming models vary by platform • Bitcoin - primitive ”Forth” script • IBM Hyperledger – GoLang • Ethereum - Solidity • Ethereum Solidity is our example in this session 20
Example: Ethereum Solidity Smart Contract contract Coin { // The keyword "public" makes those variables readable from outside. address public minter; mapping (address => uint) public balances; // Events allow light clients to react on changes efficiently. event Sent(address from, address to, uint amount); // This is the constructor whose code is run only when the contract is created. function Coin() { minter = msg.sender; } function mint(address receiver, uint amount) { if (msg.sender != minter) return; balances[receiver] += amount; } function send(address receiver, uint amount) { if (balances[msg.sender] < amount) return; balances[msg.sender] -= amount; balances[receiver] += amount; Sent(msg.sender, receiver, amount); } } 21 // More details later …
Aside: Storing Data • Blockchains not designed for large data items • Some (Bitcoin) optimised for many small transactions • Large data stored “off chain” • e.g. IPFS and Swarm • Store pointer in blockchain 23
Thinking Point: Applying Blockchain • What could you use blockchain for? • At work or to change the world! • What problems would it solve or introduce? Recap • distributed, highly reliable, auditable, immutable database, not requiring trust between participants • smart contracts can embed computation in it • but slow, eventually consistent, limited queries 25
Smart Contracts • The “programming” bit of blockchain technology • Code in the blockchain executed by the runtime • Any participant can add a smart contract (for a fee) • Contract usually mutates the state of the blockchain • add another transaction • Transforms blockchain to a dynamic system • A bit like triggers and stored procedures in RDBMS 27
Bitcoin “Script” • Very simple “FORTH-like” virtual machine • Constrained programming model of “locking” and ”unlocking” scripts • Locking script (“scriptPubKey”) defines constraints to execute the transaction • Unlocking script (“scriptSig”) satisfies the constraints to allow execution • Small number of “op codes” for use in scripts. Example Lock: OP_DUP OP_HASH160 OP_EQUAL OP_CHECKSIG Unlock: 28
Ethereum Solidity • Most popular contract language for Ethereum • Turing complete, object-oriented language • Inheritance and user-defined types • Compiles to bytecode that runs on the EVM • Emerging eco-system of frameworks and tools 30
Ethereum Solidity contract Coin { // The keyword "public" makes those variables readable from outside. address public minter; mapping (address => uint) public balances; // Events allow light clients to react on changes efficiently. event Sent(address from, address to, uint amount); // This is the constructor whose code is run only when the contract is created. function Coin() { minter = msg.sender; } function mint(address receiver, uint amount) { if (msg.sender != minter) return; balances[receiver] += amount; } function send(address receiver, uint amount) { if (balances[msg.sender] < amount) return; balances[msg.sender] -= amount; balances[receiver] += amount; Sent(msg.sender, receiver, amount); } } Contract Typed state Event for log (and callback) Functions to operate on state 31
What is Blockchain? • A novel type of distributed transaction store • Append-only, auditable, fault tolerant, secure by design • Can be slow and high-latency by accident • Most host “smart contract” code to provide secure computations 35
Some Applications 36 Value Transfers: securities clearing, payments Verifiable Records: property registers, supply chain, loyalty points Identity: verifiable digital identity, passports Verifiable Storage: immutable storage of digital assets Decentralised Notary: proof of existence of digital asset Currencies: Bitcoin, Ether, Litecoin, …
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